The Waive and Stretch: Initial Thoughts On New CBA Leaks, Porzingis Extension Rumor, Nick Richards' Extension, And More
Welcome back to another edition of The Waive and Stretch Newsletter. A quick shameless plug to note that I am looking to work in basketball in any capacity and would love to connect with anyone in the industry or trying to break in. Please feel free to share this Substack with anyone who might find it interesting. Let's get into it!
What Caught My Attention This Week
We Have A Deal
We have a new Collective Bargaining Agreement! The new widely-reported CBA will begin with the 2023-2024 season and run through 2029-2030 season, with a mutual opt out after the 2028-2029 season. While I haven’t been able to get a look at the new deal yet, there have been many new updates of the deal reported through the media that relate to team-building I thought are really interesting and wanted to get my thoughts out there on.
1. The $17.5 Million Luxury Tax Apron
Based on reporting that has come out, this new CBA seems particularly harsh on teams that go deep into the luxury tax. Here are the things that teams can no longer do if they go $17.5 million deep into the luxury tax.
Use the taxpayer MLE
Utilize cash in any trades
Sign players that were bought out
Taking on more money in trades
Trading first round picks 7 years out
My first takeaway was that this kneecaps these teams quite severely. It places a greater emphasis on them being able to draft and develop their homegrown talent, but in a lot of these situations these teams sent out a lot of their picks and young players to be in a spot where they can compete for championships and are sitting at that apron number, e.g. Phoenix or the Clippers. In Phoenix’s situation, they are already $3 million over the tax for next year with only 6 players under roster. Filling out the roster with minimums already puts them at that second tax apron number, meaning they likely won’t be able to use their tax payer MLE or sign buyouts, which were going to be the main ways they were going to be able to add talent. The Suns can’t be happy seeing this being added to the CBA months after they just traded the house for KD. Not being able to take back more money in trades is potentially a huge factor as well. I could see this increasing the number of three team deals in the future, with more teams hoarding cap space into the season to act as a landing spot for bad money contracts to even out trades.
2. Luxury Tax Brackets Increasing With Cap Increases
This seemed like a no-brainer implementation. Going forward, the luxury tax brackets will increase at the same pace as the salary cap. It never made sense that the brackets were fixed to those $5 million gaps prior in a rising cap environment. I took a look at what this would look like through the life of this CBA below.
3. Extension Amount Increasing To 140%
It was reported that the upper limit on veteran extensions will increase from 120% to 140%. This had been hinted at prior, and I touched on it in a previous newsletter. I’m curious as to why it was only raised 20% and not more, or even having no limit up to the max, but I suppose teams still want protection from themselves going forward.
4. Non-Max Rookie Extensions Go To Five Years
Adding an additional year to possible non-max rookie extensions for players entering their fourth years should help teams come to more agreements and avoid restricted free agency for their young players. Though, I could see teams being a bit hesitant to go out to that fifth year with non-max guys, just to try an avoid bad, long-term contracts that will sit on your books forever (see John Collins, Duncan Robinson or Davis Bertans). Nonetheless, its better for teams to have that bargaining chip than to not have it.
5. 10% Limit On Cap Smoothing
One of the topics that i was most anxious to hear about was what the league was going to do about cap smoothing in the event of a major influx of revenue with the new TV deal coming. It appears they are just going with the system already in place, and capping any increase in the salary cap to 10% to ensure the spike in revenue gets spread across multiple years and classes of free agents. This seemed like the most logical answer, and I’ve always had the cap sheets over at Ducking The Tax set to increasing the salary cap in 10% increments over the next couple years.
There have been other aspects reported as well, including increases in the room exception and MLE, 2nd round pick exception, changes to basketball related income etc. but I wanted to wait until I get more information on those before I dive into it. I can’t wait until the CBA is released and I can pore through it to see the full extent of the changes made to the new deal that will impact the league.
Two More Things That Caught My Eye
1. The Wizards and Kristaps Porzingis Are Close To An Extension
The Washington Wizards and Kristaps Porzingis are in serious discussions on a contract extension, according to Shams Charania.
The story doesn’t provide much more info than the tweet, only that Porzingis would turn down his player option to sign a new long term deal with the team. He would have to turn down his player option in order to sign an extension this season, meaning that the minimum the first year of any extension can be is $36,016,200, the amount of said player option. Because of this, there is both a minimum and maximum extension amount that he can be signed to, which you can see below.
If the Wizards and Porzingis both agree on a number, it may behoove the team to wait until free agency to actually sign it and not do it as an extension. That way, they can start him at a lower number and get some breathing under the luxury tax. Assuming Kuzma opts out of his player option, they sit about $26.5 million below the tax line for next year with Porzingis at his player option number. However, this doesn’t include any cap hit for their 1st round draft pick (the 7th pick projects to have a 1st year cap hit of about ~$6 million). Taking their pick into consideration, that leaves them ~$20 million to re-sign Kuzma, which may be his floor this summer. Any relief they could get from Porzingis on the first year of any deal could go a long way towards tax savings on the back end.
2. Nick Richards Gets An Extension
The Charlotte Hornets and Nick Richards agreed to a 3 year, $15 million extension with a team option in the last year. This gives Richards some real money after playing on minimums for his career and gets him back out on the market at 27 or 28, depending on the team option. The Hornets lock in a rotation big at a cheap number and have some team control with the option. I thought maybe Richards could’ve gotten more as he has been enjoying a career year, but hard to turn this down and go into restricted free agency at a position that gets paid at a pretty severe discount to the others in the league. Can’t blame him for taking the money here.
Fake Signing Of The Week
Player: Brook Lopez
Team: Milwaukee Bucks
Deal: 2 Years, $50 million
Brook Lopez is having a phenomenal year, averaging 15.7 points, 6.8 rebounds, and 2.5 blocks per game on a career high 62.9% True Shooting while becoming one of the frontrunners for Defensive Player of the Year at 35 years old. His timing couldn’t be better, as he is an unrestricted free agent this offseason. This deal values him higher than the non-max bigs like Myles Turner, Nikola Vucevic, Clint Capela etc, but still not at the Embiid or Jokic level. It is a bit higher than where EPV has him, but I think that cap space teams that are trying to really compete next year, like Charlotte, Houston or Oklahoma City, could try to entice Lopez with a big money deal. The Bucks cannot afford to let Lopez walk, and thus will have to open up the pocketbooks to keep him in town.